General Requirements

• The variety of income tax benefits you can receive for having a child in college all require that you claim the child as your dependent on your income tax return in the year you wish to claim the tax benefit. Typically, the IRS only allows you to claim children as dependents until age 18, but the age limit increases to 24 for children who are full-time students. If you cannot claim the child, or elect not to claim the child, you cannot claim any tax breaks. Also, you must have paid the expenses. You cannot claim costs paid for by nontaxable sources such as scholarships or grants.
  
  

Tuition and Fees Deduction

• The deduction associated with college expenses is called the Tuition and Fees Deduction, and allows for up to $4,000 of tuition and mandatory fees to be deducted from your income tax. In addition to the general requirements, your modified adjusted gross income must fall below the annual limits for the year. Before rushing to claim this deduction, however, you should consider whether you would rather claim the American Opportunity Credit or Lifetime Learning Credit.
  
  

Tax Credits for College Costs

• Instead of claiming the Tuition and Fees Deduction, you may prefer to claim the American Opportunity Credit or the Lifetime Learning Credit. If your child is in the first four years of post-secondary education, a degree-seeking student and has no felony convictions, you can claim a tax credit of up to $2,500: all of the first $2,000 of qualifying expenses plus 25 percent of the next $2,000 of expenses. If your child is not a degree-seeking student, or is no longer in the first four years of post-secondary education, you can instead claim the Lifetime Learning Credit, which offers a maximum credit of $2,000: 20 percent of up to $10,000 of qualifying expenses.
  
  

Student Loan Interest

• If you take out a student loan to pay for the college costs for your child, you can write off up to $2,500 of student loan interest. For example, if you have to start making payments immediately on the amount you borrow, you can take a deduction for the interest portion of those payments in the year you make them. This deduction can be claimed in addition to either the Tuition and Fees Deduction, American Opportunity Credit or Lifetime Learning Credit. The student loan interest deduction has a cap on the maximum modified adjusted gross income.